Monday, November 23, 2020

Janet Yellen Will Be Treasury Secretary

 I have long been a great fan of hers as well as knowing her and her husband, George Akerlof, personally.  Back in 2009 I was the first person to call for her to be named Fed Chair. I am very pleased with this appointment.  This is as good as it gets. (For those who wanted Lael Brainerd, we need her at the Fed where all the current governors are Trump appointees other than her).  Elizabeth Warren also would have been good, but Mass has a GOP governor who would appoint her successor, not so good. Yellen is the best pick and will be great.

Barkley Rosser


ProGrowthLiberal said...

Maybe the best pick for Treas. Sec. ever!

Anonymous said...

I like this a lot too. I was thinking Elizabeth Warren would have been a better pick for director of the CFPB.

Anonymous said...

Will bernie get labor and if so will he be confirmed i hope so.

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Ramanan said...

Yellen believes in NAIRU.

Not good. said...

No, Ramanian, she does not. A quarter of a century ago when she was on thr Bd of Govs of the Fed she was the main person who convinced Fed Chair Greenspan that he should go check the date wonks in the Fed basement on productivity changes so that even though the unemployment rate was moving below the widely publicized NAIRU it was OK not to raise interest rates. He followed her advice, and the economy continued to grow with no inflation.

R., you do not know what you are talking about, ignoramus.

ProGrowthLiberal said...

I guess Ramanian does not recognize that there is some version of potential output. Which means he would flunk any basic macroeconomic course. People like that should be ignored.

2slugbaits said...

I dunno....Yellen might be overqualified for the job. She's certainly a first rate economist, but I wonder if her talents aren't wasted at Treasury. The main job of a Cabinet level Secretary is to manage a large bureaucracy. I assume she demonstrated those executive skills when she was head of the Fed, but I doubt that her executive duties at the Fed consumed as much of her time as her mundane executive duties at Treasury will. She'll need a strong deputy to take over the job of running a bureaucracy. It makes me wonder why she wasn't picked as CEA or some other more purely economist type of job.

Fred C. Dobbs said...

Janet Yellen Has Excelled at Big Jobs. This Will Be the Hardest One Yet

NY Times - Neil Irwin - November 24

If confirmed by the Senate as Treasury secretary, Janet Yellen will be among the most accomplished people to take over the big office at 1500 Pennsylvania Avenue in the 231-year history of the department.

Few people in any era have served at the highest levels of economic policymaking for as long, and with as much distinction. Among other things, she will be the first person to have been the chief White House economist and head of both the Treasury and the Federal Reserve. At the Fed, she played a major role in engineering the longest economic expansion in American history, cut short only by the pandemic.

Americans should hope that she has gotten plenty of rest in the three years since leaving government, because the job she is set to soon occupy may be the hardest one yet.

Her biggest task will be to navigate the tricky economics and even trickier politics of generating a strong recovery out of the pandemic. A stalemate on Capitol Hill over pandemic relief creates the risk that the economy will dip back into recession in the months before a coronavirus vaccine is widely available. If no deal is reached before President-elect Biden is inaugurated in January, Ms. Yellen will probably play an important role in trying to push lawmakers to agreement.

The Treasury secretary acts as the United States’ chief financial diplomat, and in that role she will face the unenviable task of trying to reshape a world economic system that has been disrupted by the Trump administration’s trade wars and a bipartisan rise in distrust of China.

More broadly, the Treasury secretary job is more complex than simply acting as the country’s economist-in-chief. Ms. Yellen will be drawn into a wider range of policy areas, and into more intensive diplomacy and political maneuvering, than she has to date.

As important and powerful as the Fed is, in some ways it can resemble a university economics department more than a fast-paced center of policymaking. Ms. Yellen, like her predecessors, had the benefit of being able to spend long hours analyzing the state of the economy and debating the best course of policy, and precisely crafting every word of public statements.

Treasury secretaries, by contrast, have their fingers in a wide range of domestic and foreign policy. In recent weeks alone, the department announced it was imposing sanctions related to North Korea and Iran, introducing plans for how businesses will be taxed on their pandemic rescue loans and ruling on requirements for divestment of the social platform TikTok for national security reasons.

Ms. Yellen is no stranger to high-level politics and international diplomacy, but if confirmed, she will be more engaged than ever in trying to bend both domestic and international rivals to an administration’s will. ...

Fred C. Dobbs said...

One particularly interesting area to watch will be the relationship between fiscal policy — the power to tax and spend, soon to be partly under Ms. Yellen’s stewardship — and her former domain of monetary policy, the power to adjust the supply of money. Those lines have become more blurred this year. The pandemic response has been organized as a joint effort between the Treasury, which is putting up billions of dollars in capital to support debt markets, and the Fed, which administers the programs and lends billions more from its own limitless balance sheet to make them more powerful.

But there have been clear schisms thus far. The Fed has been more inclined to structure the programs to help the economy more but with greater risk that the Treasury will lose money, while the Trump Treasury has been more cautious.

Meanwhile, the Fed is buying vast sums of Treasury bonds and keeping interest rates close to zero indefinitely, seeking to stimulate the economy — and effectively giving the government carte blanche to spend as necessary to contain the economic fallout of the pandemic. It raises knotty questions about just how independent the central bank is, and should be, from the rest of the government at a time of crisis.

Ms. Yellen will approach these questions steeped in the institutional values of the Fed, where she started her career as a young researcher. She has served as president of the San Francisco outpost of the central bank, as its vice-chair, and four years as its leader. She and Jerome Powell, the current Fed chair, were colleagues for many years. She entrusted him with much of the hard, unglamorous work of overseeing the central bank’s operations.

When she and Mr. Powell have the regular breakfasts and lunches that are typical for the occupants of their jobs, there will be an irony that she, as an economist, has a more conventional résumé for a Fed chair and he, a lawyer and former Wall Street and Treasury official, has a job history more typical of a Treasury secretary.

Still, expect her to push for more liberal use of emergency credit facilities to support the economy, while also maintaining a relatively traditional view of the importance of Fed independence and its ability to shape monetary policy without being second-guessed by political authorities. A Treasury secretary with less attachment to the Fed might take a more flexible view of the roles of the two organizations.

In that sense, the selection of Ms. Yellen tells us something significant about President-elect Biden’s priorities as he assembles his team — in particular, a view that what matters is not flash and dazzle, but attributes like credibility, seriousness and stature. If confirmed, Ms. Yellen will take office amid a mess of an economy, a polarized political environment and a frayed global economic system. She’ll need every ounce of those qualities.

Fred C. Dobbs said...

Biden seeks swift Cabinet votes, but GOP Senate stays silent

via @BostonGlobe - November 24

WASHINGTON (AP) — As President-elect Joe Biden started rolling out his administrative team, one voice has been notably silent: Senate Majority Leader Mitch McConnell.

Senate Republicans will hold great sway in confirming or denying Biden’s Cabinet nominees, regardless of which party controls the narrowly split Senate after runoff elections. But key Republican senators, including the GOP leader, are keeping quiet, for now, choosing their battles ahead.

In announcing his national security team, Biden appealed Tuesday to the Senate to give the nominees “a prompt hearing" and "begin the work to heal and unite America and the world.”

The soonest the Senate would consider the nominations is Inauguration Day, Jan. 20, when past presidents often have been able to win swift confirmation of top national security officials shortly after taking the oath of office.

But with President Donald Trump still disputing the election, McConnell is setting the tone for Senate Republicans by not publicly congratulating Biden or acknowledging Trump's defeat. He wants to give the president time to contest the vote, even as Trump's legal team has been losing most of the cases.

Even if McConnell is willing to accept Biden’s choices for top Cabinet positions, the Republican leader is not expected to allow easy Senate confirmation without a political price. ...

(Hmmm. Is a quiet deal possible? Biden agrees not to prosecute Trump,
or not get too exercised if Trump pardons himself, in return
for senatorial collegiality on Cabinet picks.)

Anonymous said...

Please, please remove the obscene comment above. Such a comment harms the entire thread.

Please remove the comment. said...


I am sorry that I do not know how to remove comments. I also find it highly annoying. Unfortunately the governance of this blog has become a bit murky.

Fred C. Dobbs said...

(The faq info for Blogger says that those who
are 'admins' are empowered to delete posts,
so best find one of them.)

In Praise of Janet Yellen the Economist

NY Times - Paul Krugman - November 27

She never forgot that economics is about people.

It’s hard to overstate the enthusiasm among economists over Joe Biden’s selection of Janet Yellen as the next secretary of the Treasury. Some of this enthusiasm reflects the groundbreaking nature of her appointment. She won’t just be the first woman to hold the job, she’ll be the first person to have held all three of the traditional top U.S. policy positions in economics — chair of the Council of Economic Advisers, chair of the Federal Reserve and now Treasury secretary.

And yes, there’s a bit of payback for Donald Trump, who denied her a well-earned second term as Fed chair, reportedly in part because he thought she was too short.

But the good news about Yellen goes beyond her ridiculously distinguished career in public service. Before she held office, she was a serious researcher. And she was, in particular, one of the leading figures in an intellectual movement that helped save macroeconomics as a useful discipline when that usefulness was under both external and internal assault. ...